UK - Henderson Global Investors and a group of 30 pension funds are squaring up for a courtroom battle as a “final letter before action” has been sent to Henderson by the pension funds’ lawyers.
The group of 30 pension funds is suing Henderson for £350m over its management of the Henderson PFI Secondary Fund II, which was promoted as low risk, even though Henderson used the bulk of the fund to purchase construction company John Laing for £1bn in 2006.
The pension funds argue that this acquisition exposed them to unexpected liabilities, such as the company’s pension fund deficit, its PFI bidding business and its non-PFI businesses, making the fund materially higher risk than they had been led to expect and that this caused a 66% fall in the fund’s value by June 2009.
Clifford Chance, the law firm acting on behalf of Henderson and Ashurst, representing the pension funds, had been in negotiations since September in a bid to reach an out-of-court settlement, following extensive comment on the dispute in the press.
Gary Cullen, a pensions lawyer at Maclay Murray & Spens, said: “A final letter before action will have set out the level of damages the pension funds are seeking and a deadline by which Henderson must pay up or they will issue proceedings.”
A source close to the litigation said: “Henderson’s stance hardened following its recent appointment of a new barrister who advised them not to settle, while the pension funds had become increasingly restless and angry at the lack of progress.

“So it looks as though the matter will have to be settled in court.”
The group of pension funds includes some of the largest names in the industry, including the BBC, Nestle, Corus, Railpen, BAE Systems, Bupa, Tesco, Scottish & Southern Energy and Smurfit Kappa, as well as three local authority schemes: City of Edinburgh, South Tyneside and Kent County Council.

Consultants to the schemes are Cardano, Towers Watson and Aon Hewitt.
Both law firms and Henderson declined to comment.